Economy Turkey ramps up taxes to spend on defence tech By William Sellars October 15, 2024, 3:07 PM Alamy via Reuters Shoppers in Istanbul's Grand Bazaar. Consumers are expected to push back against Turkey's tax plan because large corporations are 'not seen as contributing fairly' Could raise $2bn a year Includes credit cards and cars Turkey investing in drone research Turkey’s government has proposed a raft of taxes on everything from credit cards to watches in order to fund increased spending on defence research and development. The ruling Justice and Development Party tabled draft legislation for the levies with parliament’s finance committee on October 11. In recent years Turkey has made a priority of developing its defence industry, building capacity in drone and aircraft technology in particular as it seeks greater military self-sufficiency. According to government officials, the measures will generate between $2 billion and $2.2 billion a year for the Defence Industry Support Fund (SSDF). The fund’s revenue was $3.9 billion in 2023. One of the measures in the draft legislation is an annual 750 lira ($22) levy on all credit cards with a minimum limit of 100,000 lira or above. While this will affect businesses with company credit cards, most of the funds are expected to come from consumers. The government is also proposing new charges on property transactions, with both buyers and sellers required to pay a one-off fee of 750 lira. A levy of 3,000 lira will be charged to register a new vehicle and 1,500 lira for the sale and transfer of second-hand vehicles. There is likely to be push back against the proposals, economist Mustafa Sönmez told AGBI, especially the levy on credit cards. Turkey U-turns on taxing crypto and stock market earnings Turkey targets business with steep taxes to raise revenue Turkey to impose minimum corporate and income taxes “While the annual charge is not a lot, there will be resistance because the public will see it as unfair and the burden put on the wider community,” he said. “The public sees how major corporations have huge tax exemptions so with this levy again the higher-income group is not seen as contributing fairly. We can expect to see people applying to lower their credit card limits in order to avoid having to pay this.” The revenue package also calls for a consumption tax on non-military drones and on watches valued at more than 5,000 lira. Previously exempt low-powered motorcycles rated at 100cc will be made subject to standard motor vehicle registration tax – another levy that will have a particular impact on low earners. According to some estimates, the package of levies will add about 3,725 lira to the bills of lower-income households each year, although Sönmez suggests not all the measures will be implemented. “We have already seen some reaction from within the ruling party against this,” he said. “These measures have not yet passed, and we see some being withdrawn.”